Multiple choice

A couple wishes to purchase a house for Rs. 15,00,000 with a down payment of Rs. 4,00,000. If they can amortize the balance at an interest rate 9% per annum compounded monthly for 10 years, find the monthly installment (EMI). [Given, (1.0075)-120 = 0.4079]

  1. Rs. 5324.5

  2. Rs. 15324.5

  3. Rs. 13933.5

  4. Rs. 23933.5
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Loan amount = 15,00,000 - 4,00,000 = 11,00,000. Interest rate = 9% / 12 = 0.75% per month. n = 120 months. EMI = P * r * (1+r)^n / ((1+r)^n - 1). Using given (1.0075)^-120 = 0.4079, EMI = 1100000 * 0.0075 / (1 - 0.4079) = 8250 / 0.5921 = 13933.45.

AI explanation

The loan balance is 1500000 minus 400000, which equals 1100000, and the monthly interest rate is 9% divided by 12, or 0.0075. Using the equated monthly installment formula of Principal multiplied by r divided by the quantity 1 minus 1.0075 to the power of negative 120, we substitute the given value of 0.4079. This yields 1100000 multiplied by 0.0075 divided by 0.5921, which calculates to a monthly installment of Rs. 13933.5.

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